Some traders try to take advantage of these price fluctuations by entering short-term trades in volatile UK markets just before, or immediately after, news regarding the Brexit deal comes out.
Certain news reports, such as calls to hold an additional “People’s Vote” or second referendum, as well as votes in UK and EU parliaments, tend to increase volatility in the pound sterling. Reports generally regarded as negative, like political upheaval or interim elections, tend to weaken the pound.
Plus500 offers risk management tools which can help you when trading CFDs on Brexit-related price shifts.
Among these are stop orders that allow you to set a specific rate at which you would like your position to close:
To protect your profit, use ‘Close at Profit’ order.
To minimise potential losses, use ‘Close at Loss’ or ‘Trailing Stop’.
To ensure your position closes at the exact rate you have set, use the ‘Guaranteed Stop’.
Note that Close at Profit and Close at Loss orders do not guarantee your position will close at the exact price level you have specified. When using the ‘Guaranteed Stop’ feature, your trade is subject to a wider spread.
Below is an example of how the Close at Loss order works when trading on a popular UK stock CFD:
Lloyds Banking Group, a leading British-owned bank, is trading at $57.60/$57.64 (Sell/Buy) per share. You Buy 500 CFDs in Lloyds Banking Group at $57.64, while placing a Close at Loss order at 57.45. The stock’s Sell price falls instantly to $57.40 and then drops further to $57.10. Your position will close at $57.40, i.e. the closest available rate to your order.
Your position's loss is: 500 * (57.40 - 57.64) = -$120
Had your position closed at the Sell rate of 57.10 without a Close at Loss order, your loss would have been: 500 * (57.10 - 57.64) = -$270
We offer a range of real-time trading alerts which you can set on Brexit-related instruments in order to keep track of changes in the markets.
Our trading alerts are completely free-of-charge, easy-to-use and are available for all desktop and mobile devices.
In addition, we occasionally send email, push and SMS notifications on the latest Brexit news, based on their impact on financial markets.
To ensure your device is set to receive notifications, simply Sign Up / Log In, and go to ‘Menu’ > ’Notifications Settings’ to manage your preferences.